Defining the word education is not an easy task to perform. The word education carries much more depth than many an ordinary person presumes to know. This is because many people confuse this word with just schooling or college education. Though the word education does certainly include that, it entails social cultural mental and physical development through a cultivation of learning that is done with respect. So it is not just a preparation towards future living, but is very much living itself and transforms life as such.
The desire to find a niche in life is there in everyone's mind. Can a person fulfil such a desire? For most this means aspirations towards higher studies. But such aspirations are not always feasible for everyone unfortunately. The most common stumbling block in the path of quality higher education is the cost it incurs. Many eager learners abandon their aspirations under the pressure of the undue burden of the expenses involved. As per the statistics, the US stands out to be most expensive country for higher education in the whole world! College tuition in the US is defined as the cost of higher education collected as cash by the educational institutions within the US. The average public college fee ranges from $3000 for a 2 year course to $29000 for a 4-year course. The private colleges also hiked their already high fee by 3.9% in 2012-2013. Let's explore the causes for such a predicament.
The boom in the percentage of students for higher learning was noted in the US following WW II. Then many families even went into debt in the process of providing their offspring's with higher education hoping to give them a better secure future. Other than offering loans and grants, the US federal government does not assist higher studies with the exception of military academies.
Experts opine that one of the most important reasons causing the alarming hike in the cost is the marked reduction in the state as well as federal funding support to the state colleges. This fall is as high as 26% since 1990. The lack of funding supporting turn forced the colleges to shift the burden onto the students especially for higher education. One would be more or less correct in the presumption that higher education in the US is privatised in effect in this scenario. Another cause cited for the high cost is the heavy tax levied on the investments on higher education combined with insufficient subsidies.
Despite all these, a definite increase in the value of higher education is noted in the recent times, so much so that there is marked difference in the earnings of a college graduate and a high school diploma holder. Even life expectancy and the period of life spent working remain high in the educated in comparison with the uneducated. This probably motivates students to make avail of the numerous student loans advertised in the market. Therefore, the investment on higher education remains on the high. At the same time, the number of students incurring huge debts and suffering by the burden is also on the rise. In fact, the credit card debt is much lower than the student loan debt in totality, in the US.
So what are the means to tackle this sad state of affairs?
Several resources have flooded the loan market for a student who is in search for a loan. But it certainly pays if the borrower exercises his/ her wisdom and discretion in choosing the product and understanding the terms of repayment properly and precisely before taking in the plunge.
The student's loans generally could be;
1. Subsidised loans where the federal government pays the interest when the student is still in college and so this helps the student save a lot of money on interest. Basically such loans are dispersed to students depending on their financial requirements and therefore the amount could be limited.
2. Unsubsidised loans where the interest starts accruing with the dispersal of the loan money. Any unpaid interest gets accrued to the principal amount and therefore the burden on the student is huge.
3. Credit cards are there for the taking by anyone needy. But they are also the most dangerous in that they can easily push the poor student into high debts incurred in lieu of higher interest rates, compared to the other two loans. Also inability to repay can jeopardise not only the credit history and thereby future borrowing capacity of the poor student but also his/her future job prospects.
The options that need to be clearly and essentially understood by the borrower in order to avoid such mishaps that play havoc with future are:
Grace period duration for the loan
Discounts that are available on setting up direct debit from the account
Consolidating several loans so as to make a single monthly repayment with a probable low interest rate
In the event of inability to repay the loan the student would be well advised to get in touch with the lender with this information in order to arrive at a mutually agreeable payment arrangement plan better suited to his/ her budget. Finally, in case of extreme financial hardship the student is eligible for deferment or forbearance which gives him/her the right to postpone/ decrease the federal loan repayment albeit temporarily. It is crucial for the borrower to consider these carefully and plan out at the time of taking the loan itself and prevent future disasters to life in general.
Experts and student right activists have come forward with the following recommendations:
1. Increase the state funding support for higher education to combat the higher tax levied on such investment
2. Increasing the state/federal grants to universities/colleges
3. Introduction of insurance schemes to decrease the investment risk on higher education
4. Slapping down endowment tax on universities based on their tuition fee
5. Encouraging the colleges to search for ways to cut down on the cost of education without compromising on the quality.
The fact is all these are easier said than done. So till at least some of them are implemented, these recommendations remain as wishful thinking leaving the major issue of cost reduction more or less unresolved.